On the bubble: PepsiCo to acquire SodaStream in $3.2B transaction

August 21, 2018

PepsiCo and SodaStream International formally announced on August 20 that they have entered into an agreement under which PepsiCo has agreed to acquire all outstanding shares of SodaStream for $144.00 per share in cash, which represents a 32% premium to the 30-day volume weighted average price. The transaction has been valued at $3.2 billion.

The companies said that the deal would enable them to combine PepsiCo’s strong distribution capabilities, global reach, R&D, design and marketing expertise with SodaStream’s differentiated and unique product range—thereby, positioning SodaStream “for further expansion and breakthrough innovation.”

Founded in 1991 in Israel, SodaStream claims to be is “ the number-one sparkling water brand in volume in the world and the leading manufacturer and distributor of sparkling water makers; saying, “We enable consumers to easily transform ordinary tap water into sparkling water and flavored sparkling water in seconds. By making ordinary water fun and exciting to drink, SodaStream helps consumers drink more water.”

The transaction is another step in PepsiCo’s Performance with Purpose journey, the beverage and snack food company said—promoting health and wellness through environmentally friendly, cost-effective and fun-to-use beverage solutions.

“PepsiCo and SodaStream are an inspired match,” said PepsiCo Chairman and CEO Indra Nooyi. “[CEO] Daniel [Birnbaum] and his leadership team have built an extraordinary company that is offering consumers the ability to make great-tasting beverages while reducing the amount of waste generated. That focus is well-aligned with Performance with Purpose, our philosophy of making more nutritious products while limiting our environmental footprint. Together, we can advance our shared vision of a healthier, more-sustainable planet.”

For his part, Birnbaum commented, “Today marks an important milestone in the SodaStream journey. It is validation of our mission to bring healthy, convenient and environmentally friendly beverage solutions to consumers around the world. We are honored to be chosen as PepsiCo’s beachhead for at home preparation to empower consumers around the world with additional choices. I am excited our team will have access to PepsiCo’s vast capabilities and resources to take us to the next level. This is great news for our consumers, employees and retail partners worldwide.”

“SodaStream is highly complementary and incremental to our business, adding to our growing water portfolio, while catalyzing our ability to offer personalized in-home beverage solutions around the world,” said Ramon Laguarta, CEO-Elect and President, PepsiCo.  “From breakthrough innovations like Drinkfinity to beverage dispensing technologies like Spire for foodservice and Aquafina water stations for workplaces and colleges, PepsiCo is finding new ways to reach consumers beyond the bottle, and today’s announcement is fully in line with that strategy.”

According to their joint statement, the acquisition has been approved unanimously by the boards of directors of both companies. The transaction is subject to a SodaStream shareholder vote, certain regulatory approval,  and other customary conditions, and closing is expected by January 2019.

A Forbes analysis of the carbonation maker found, “SodaStream had said some time back that the global market for at-home beverage systems has the potential to grow to $260 billion, while the market in the U.S. could generate a cumulative $40 billion. “Of course,” the business news outlet said, “this estimate used the aggressive assumption that these systems will penetrate about 87% of the domestic households, which seems improbable.”

According to small business and marketing advisor Brandon Gaille, the average American consumes 44 gallons of soda every year—a 20% overall decline from peak rates in the 1990s. Sales of sparkling water jumped 8.6% between 2009 and 2011 while soda sales slumped.

Research contact: @Trefis

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